Knight Frank’s research analysis, expects 20 of the 22 cities to see prices remain flat or increase in 2021, a slight reversal of the trend seen in 2020, where analysts expect nine cities to end the year with lower prices.

Knight Frank, a leading international property consultancy, in its ‘Prime Global Forecast 2021’ report cited, the prime residential prices across the 22 cities (on average) are expected to remain static in 2020, before rising by 2% in 2021.

The prime residential market of Mumbai, though expected to see a flat 0.0% annual price change in 2021 (Dec 20 – Dec 21), is likely to witness a buoyancy in demand for the prime properties. Shanghai and Cape Town lead the forecast for 2021 with annual price growth of 5% forecast in 2021 whereas Buenos Aires is expected to be the weakest-performing global city, with prime residential prices falling by -8.0% in the same year.

Knight Frank’s research analysis, expects 20 of the 22 cities to see prices remain flat or increase in 2021, a slight reversal of the trend seen in 2020, where analysts expect nine cities to end the year with lower prices.

FUTURE DIRECTION: How will demand, supply and sales volumes change in 2021?

Source: Knight Frank Research

Besides the forecast, Knight Frank, through its Prime Global Cities Index Q3 2020 has also shared a 12-month and 3-month price change for the prime residential markets. The report tracks the movement in prime prices across 45 cities. A year ago, the index rose at a rate of 1.1% per annum, climbing to 1.6% by the end of September 2020.

Delhi, Mumbai and Bengaluru ranking by annual percentage change for the last three quarters:

Source: Knight Frank Global Research

Shishir Baijal, Chairman and Managing Director at Knight Frank India, said, “With the modest price correction in the Indian real estate sector, post-lockdown, the luxury market has seen significant traction. Buyers are responding favourably to residential purchase across segments including luxury as sale prices have corrected in the last few quarters making investment in property attractive. It is also not surprising that those markets that are already witnessing an economic rebound have moved higher in the rankings in this quarter. In this period of uncertainty, the Knight Frank Prime Global Cities Index still registers a prime price growth across the globe despite the pandemic.”

 Key observations for Prime India markets:

• Delhi’s prime residential market performed better than Mumbai and Bengaluru. Globally, the city ranked 27^th with a 0.2% annual price change for the period Q3 2019 – Q3 2020; with a decline of 0.1% price change in Q3 2020 compared to the previous quarter.
• Mumbai ranked 33^rd with -1.3% annual price change for the period Q3 2019 – Q3 2020. The city saw also saw a decline of 0.7% price change in Q3 2020 compared to Q2 2020.
• Bengaluru ranked 34^th with a decline of 1.4% annual price change for the period Q3 2019 – Q3 2020. The city registered a price decline of -1.5 % in Q3 2020 compared to the previous quarter.

 THE KNIGHT FRANK PRIME GLOBAL CITIES INDEX Q3 2020

(RANKED BY ANNUAL % CHANGE)

 Source: Knight Frank Global Research| *Based on top-tier of mainstream market in metro area | Provisional

2021 FORECAST: ANNUAL % CHANGE (Dec 20 – Dec 21)

Kate Everett-Allen, head of international residential research at Knight Frank said: “From health to economics, 2020 saw the world upended. Our latest data, however, shows that prime property markets were largely resilient. As we look to 2021, clearly there are challenges ahead. Europe is currently in lockdown in some markets, and most fiscal stimulus measures are set to taper off in early 2021. The concern for investors is that rents are declining in several key cities; due in part to the absence of international students, but also due to a surge in supply as landlords switched from holiday lets to long-term rentals. Taxation will be a big theme next year too as all eyes will be on government plans to replenish public coffers. From proposed wealth tax changes (Spain, Canada) to higher capital gains taxes (US and UK), the tax landscape looks set to shift.”

TRENDS TO MONITOR:                                                                                                  

Outlined below are some of the trends set to influence prime property markets throughout 2021 and beyond:

1) ESG takes off: Green and ethical investing is set to filter all aspects of global property markets

2) The blended city: With digital working the new norm, there will be an online and offline approach to work and our lifestyles, leading to more residential stock in city centres and more retail and amenities in suburbs

3) Accessible boltholes: The location and specification of second homes is set to change, with many looking for a bolthole within driving distance of their primary residence, the line between primary and secondary residences has become blurred

4) Digital nomads: First Barbados, then Bahamas and Dubai, policymakers are acknowledging the global workforce has gone mobile and are introducing short-term visas in an to boost their pandemic-hit economics

5) Alternative sectors: Investors are widening their net given the opportunities in the medium and long-term

6) Resort markets: Ski and sun locations, from Aspen to Cannes are seeing demand strengthen

7) Debt harder to come by: Finance looks set to remain cheap, but lenders will be more cautious, raising loan-to-value ratios and making finance costlier for highly leveraged clients

8) Changing tax landscape: The next few months should give us some indication as to the route governments plan to take to replenish lost revenue as a result of the pandemic

ALSO READ: Rapid Rise In Pandemic-Driven Telework Could Make First-Time Homeownership Accessible